Apprenticeship Levy Explained

You may have heard of the Apprenticeship Levy, a government measure that requires certain businesses to pay a sum of their earnings into an Apprenticeship Service Account. The English government will supplement this amount, which contributes towards the apprenticeship funding pot for employers.

If you’re wondering whether the Apprenticeship Levy can be used to help to develop existing employees, or to whom the Apprenticeship Levy will apply, Solvo Vir has outlined below all the information you need to know about the Apprenticeship Levy.

How do I pay for training if my Apprenticeship Levy funds have already been spent? Helen Culwick
2017-12-21T15:13:57+00:00

Apprenticeship funding for employers can still be made available, even if the organisation has used the funds in their account. You will be required to co-invest just 10% of the total cost of the apprenticeship standard, with the government paying the remaining 90%. This is the same arrangement that is in place for non-levy paying organisations.

What can the Apprenticeship Service Account be used for? Helen Culwick
2019-01-03T14:29:10+00:00

Before employers can utilise the apprenticeship funding in their Apprenticeship Service Account, they must:

Select the training provider(s) whom they’d like to deliver the apprenticeship(s)

Choose the organisation to deliver the end-point assessments

Set an agreed price with both the training provider and the assessment organisation

Once an employer has agreed to buy apprenticeship training from a training provider, and the apprenticeship has started, there will be monthly deductions from the employer’s Apprenticeship Service Account to the selected training provider. Twenty percent of the total amount will be held back until that particular programme is completed.

If the Apprenticeship Levy funds in an employer’s Apprenticeship Service Account have not been spent, they will expire 24 months after they were first deposited into that account.

For more information on how to start apprenticeship funding for employers with an Apprenticeship Service Account, please click here.

How can employers spend their Apprenticeship Levy funds and how much can they spend? Helen Culwick
2018-01-05T12:04:47+00:00

Levy funds can be spent on training programmes for entry-level talent or they can be used to further develop an employer’s existing talent pool. Employers will only be permitted to use the funds in their digital accounts towards the costs of apprenticeship training and end point assessment. These funds must be spent with an approved training provider and assessment organisation.

There are funding bands that will determine the maximum amount of your Levy pot which can be spent on each apprenticeship framework. Employers will be able to negotiate with providers to agree a price. These funding bands are still being formulated by the government.

Who will the Apprenticeship Levy apply to? Helen Culwick
2019-01-03T14:30:57+00:00

The Apprenticeship Levy will apply to UK employers in all sectors who have an annual PAYE bill of £3m or more. Once an annual allowance is deducted from the employer’s wages bill, the equivalent of 0.5% of the employer’s total PAYE amount is taken from the remaining amount, which is the Apprenticeship Levy payment.

This is deposited in a Apprenticeship Service Account and the government in England will supplement this amount – adding to the total apprenticeship funding. The Apprenticeship Service Account was previously known as the Digital Apprenticeship Account (DAS).

Employers can use their Apprenticeship Levy funds for existing employees and new staff,
meaning they can be used to provide:

Apprenticeships and entry-level programmes for new staff

Professional development programmes for existing members of staff

These training programmes and apprenticeships will help plug skill gaps within your organisation, for example by developing your existing team by training new recruits through an apprenticeship programme.

Many of the people we have trained in the past have commented on how training has increased their levels of confidence in carrying out their
jobs. Often, employees who have been given the opportunity to gain recognised qualifications feel empowered to make better business decisions and feel more rewarded within their organisation.

What happens if my pay bill is less than £3 million? Helen Culwick
2017-12-21T15:22:33+00:00

Employers with an annual pay bill below £3,000,000 will be required to contribute 10% of the cost of each apprenticeship. The Government will fund the remaining 90% of apprenticeship costs. This is called co-investment.

What is covered under the pay bill? Helen Culwick
2017-12-21T15:23:24+00:00